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The euro US dollar exchange rate is struggling to hold above the key psychological level of US$1.10. The pair is hovering around one-month lows amid persist uncertainty surrounding US — China trade deal and ahead of Federal Reserve Chair Jerome Powell Congressional Testimony.
The euro trended lower across the previous session, paring gains from Monday. The euro has already shed over 1.2% versus the US dollar so far this month. The euro headed southwards despite an improvement in German sentiment. Data showed that German investor sentiment jumped by more than what analysts had expected in November. Optimism following progress in the US — China trade dispute combined with an improved international economic environment helped boost sentiment. However, the euro shrugged off the stronger than forecast numbers.
German inflation was also inline with analysts forecasts at a lacklustre 1.1% in October. With inflation so far from the European Central Bank’s 2% target, the central bank could be forced to cut rates again. The prospect of loser policy is weighing on demand.
Investors will now turn their attention to eurozone industrial production figures, which could drag on the common currency. Analysts predict industrial production declined -0.2% month on month in September, well short of the 0.4% increase in the previous month. On an annual basis, industrial production is expected to have declined -2.3%.
Trump Touched Briefly On Trade
The dollar was broadly in favour across the previous session. Investors focused on a highly anticipated speech by President Trump at the Economics Club of New York. Investors were particularly keen to hear Trump’s take on progress in US — Chinese trade talks. However, whilst Trump touched on international relations, he refrained from giving concrete declarations about the outlook of a phase one trade deal. Trump said that a deal could come soon. That was sufficient to lift US stock markets to fresh record highs, boosting the demand for dollars.
Today dollar investors will switch their attention to Federal Reserve Chair Jerome Powell. With two speeches from the two most important figures in the US for the dollar, some volatility would be on the cards. Jerome Powell will testify before Congress on the state of the US economy. A cautious sounding Powell could drag the dollar lower.
| What do these figures mean? |
| When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written: 1 EUR = 1.12829 USD Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro. Or, if you were looking at it the other way around: 1 USD = 0.88789 EUR In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar. |